The Serious Fraud Office (SFO) has laid more than 100 charges against three former directors and one ex-manager of the Five Star Finance Group over related party loans valued at more than NZ$50 million. The four have been arrested.
The SFO alleges the four - Nicholas George Kirk, Marcus Arthur MacDonald, Anthony Walpole Bowden and Neill Allan Williams - intentionally applied funds in breach of the company’s obligation under its trust deed; and/or · dishonestly used documents with intent to obtain a benefit. The offences each carry a maximum penalty of seven years imprisonment.
Three Five Star Group companies - Five Star Finance, Five Star Consumer Finance and Antares - collapsed between August 2007 and June 2008 owing just over NZ$100 million to about 2,400 depositors. See our Deep Freeze List here.
Read the SFO's statement below:
The Serious Fraud Office (SFO) today arrested and laid over 100 charges under the Crimes Act against four individuals involved with the collapse of the Five Star Finance Group. The loans to which the charges relate have a total value of $50M, a large proportion of which is irrecoverable.
The four accused are Nicholas George Kirk, Marcus Arthur MacDonald, Anthony Walpole Bowden and Neill Allan Williams.
Kirk, McDonald and Bowden are former directors of Five Star Finance Limited, while Williams, although not a director, was heavily involved in the management of the company.
The charges concern related party lending that occurred between 2003 and 2007.
They allege that in the course of undertaking that lending the defendants: · intentionally applied funds in breach of the company’s obligation under its trust deed; and/or · dishonestly used documents with intent to obtain a benefit. The offences each carry a maximum penalty of seven years imprisonment.
Announcing the charges SFO Chief Executive Adam Feeley said the conclusion of the investigation was an important step towards the SFO’s new goal of contributing to greater investor confidence in New Zealand’s financial markets.
“For investors to have confidence in the financial markets they need to know that there will be quick and effective intervention by a law enforcement agency with the powers and resources to deal with serious and complex fraud.”
Mr Feeley said that the SFO’s major cases currently under investigation, which include Capital + Merchant Finance Ltd; Aorangi Securities Ltd; Belgrave Finance; and allegations of fraud inside the Accident Compensation Corporation, were all scheduled to be completed well inside the SFO’s new 12 month performance target.
Mr Feeley praised the work of the team which had worked on the case saying that it had been one of the largest and most complex cases investigated by the Office in recent years.
“Investigations of the scale and complexity of Five Star Finance require detailed forensic accounting analysis which inevitably takes time.”
“We now are bringing even greater accounting and legal resources to bear on important cases such as Five Star, and this will in turn result in faster investigations without quality being compromised.”
Mr Feeley said that with serious criminal charges now laid against Bridgecorp, Five Star Finance and National Finance, the SFO was emerging from a period of restructuring and transition into a more effective agency for investigating and prosecuting serious financial crimes.
As these proceedings are now before the court, the SFO will not comment further on the Five Star Finance case.